Here is what you need to know.
The OECD cut its forecast for global growth. The Organisation for Economic Cooperation and Development trimmed its 2016 global growth forecast by 0.3% to 3%. According to AFP, the OECD attributed the change to recent weakness in economic data, lacklustre demand, disappointing investment, and the “substantial” risk for financial instability.
China’s inflation ticked up. China’s CPI accelerated 1.8% year-over-year in January, making for the fastest annual acceleration since August. Despite the jump from December’s 1.6% gain, the number fell a tad short of the 1.9% advance that was expected. Stripping out the volatile food and energy components prices rose 1.2% YoY, the fastest since June. Meanwhile, PPI posted a 5.3% YoY drop versus expectations of a 5.4% decline. Producer prices in China have fallen for 47 consecutive months. The Chinese yuan strengthened 0.2% to 6.5162 per barrel.
Japanese exports plunged. Data from Japan’s Ministry of Finance showed January exports cratered 12.9% versus last year, making for the steepest annual drop in exports since October 2009. Weakness in the Chinese economy was apparent in the numbers as Japan’s exports to the Middle Kingdom tumbled 17.5%. YoY. Meanwhile, exports to the US fell 5.3% from a year ago. The Japanese yen is stronger by 0.3% at 113.80.
Indonesia cut rates. Bank Indonesia cut its key interest rate 25 basis points to 7.00% at Thursday’s meeting. The central bank noted the global economy is “expected to remain weak,” but that risks related to the fed funds rate have eased. Notable were comments about the recent strength of Indonesia’s currency, the rupiah, which appreciated 6.3% versus the dollar in the fourth quarter alone. Bank Indonesia said it will “always maintain exchange rate stability in line with the currency’s fundamental value.”
It’s going to take a miracle for Venezuela to balance its budget. Venezuela’s economy has been crashing along with the price of oil as it relies on its inefficient oil-producing infrastructure. According to the Washington Post, Venezuela’s currency, the bolívar, has lost 93% of its value on the black market over the past two years. Now, a report from Deutsche Bank says balancing Venezuela’s budget “requires oil closer to $200 than $100.” The cash-strapped country joined Saudi Arabia and Russia in freezing oil production earlier this week, but Deutsche Bank says the freeze will take time to have an effect and likely won’t be enough to help Venezuela.
Yahoo might see a proxy fight. People familiar with the matter told Bloomberg, Starboard Value LP is beginning to take steps towards a proxy fight with Yahoo. The fund is said to be unhappy with the way Yahoo is going about streamlining its business and its pledge to sell assets. According to Bloomberg, “A successful proxy fight requires a shareholder to persuade other investors to vote in favour of proposed changes.” In the case of Starboard, this would mean a new board of directors.
American Express is cutting costs. AmEx says it will streamline marketing jobs and cut costs to save $1 billion over the next two years, according to Reuters. As part of the reorganization, Chief Marketing Officer John Hayes will leave AmEx after more than 20 years with the firm while Mike McCormack will take charge of its soon to be created global marketing operations unit. “At this time, we do not know what the magnitude of those reductions will be, as decisions on specific positions affected are yet to be made,” CEO Kenneth Chenault said.
Stock markets around the world are higher. Germany’s DAX (+1.6%) leads the gains in Europe after Japan’s Nikkei, Australia’s ASX and Hong Kong’s Hang Seng all gained 2.3% overnight. China’s Shanghai Composite (-0.2%) lagged. S&P 500 futures are higher by 7.00 points at 1929.75.
Earnings reporting remains heavy. DISH Network, Duke Energy, MGM Resorts and Walmart are among the names releasing their quarterly results before the opening bell. Applied Materials, Fluor and Nordstrom highlight the companies reporting after markets close.
US economic data is moderate. Initial and continuing claims and the Philadelphia Fed will cross the wires at 8:30 a.m. ET. As a result of the holiday shortened week, Natural gas inventories will be reported at 10:30 a.m. ET and crude oil inventories will be announced at 11 a.m. ET. The US 10-year yield is down 1 basis point at 1.81%.
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